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On June 12, 2019 the Kingdom of the Netherlands and the Swiss Confederation concluded a Protocol amending the Convention of 26 February 2010 between the Swiss Confederation and the Kingdom of the Netherlands for the avoidance of double taxation with respect to taxes on income (Hereafter: the Protocol).
Although the Protocol has been signed, it has not entered into force yet. For the Protocol to enter into force, the respective ratification procedures have to have been finalized in both countries.
Below we will discuss a selection of provisions included in the Protocol of which we think they might interest our readers.
Read more: The Netherlands and Switzerland concluded a Protocol to amend their existing DTA
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During its meeting of June 14, 2019 the Economic and Financial Affairs (ECOFIN) Council has once again adjusted the EU's list of non-cooperative jurisdictions in taxation matters. This time Dominica was removed from the list.
Read more: Dominica removed from the EU-list of non-cooperative jurisdictions in taxation matters
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On June 13, 2019 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Kokott in the Case C-75/18, Vodafone Magyarország Mobil Távközlési Zrt. versus Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (ECLI:EU:C:2019:492), was published.
In these proceedings the Court is concerned with questions relating to tax law and the rules on State aid which at the same time have particular importance for the turnover-based digital services tax currently being proposed by the European Commission. The question thus also arises in this case whether the taxation of a company’s revenue according to its turnover constitutes a turnover tax or whether such a tax is a direct income tax.
In addition, the Court must once again consider the question of indirect discrimination arising from a tax regime, where in this case the discrimination can be inferred solely from its progressive rate. Lastly, the Court must address the question whether progressive taxation of economically stronger undertakings also constitutes unjustified aid in favour of other undertakings.
The redistributive effect which is generally pursued with a progressive tax rate means per se that economically stronger persons are subject to higher taxation and thus disadvantaged in comparison with economically weaker persons. As economically stronger persons tend to engage in cross-border business, this could be seen as indirect discrimination against them, in particular where the progressive scale is specifically employed to catch economically stronger foreign undertakings.
The Court must therefore rule on the compatibility with EU law of a progressive tax rate and a basic allowance, which has developed historically in many Member States, is considered necessary from the point of view of the welfare state and is, therefore, also applied to taxation of income in the Member States. Furthermore, a progressive tax rate and a basic allowance also form the basis for the digital services taxes which are planned EU-wide and have already been introduced in various Member States.
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On June 8, 2019 the OECD published the OECD Secretary-General’s Report to the G20 Finance Ministers and Central Bank Governors. The report contains two parts. Part I reports on the activities and achievements in the OECD’s international tax agenda. Part II reports on the activities and achievements of the Global Forum on Transparency and Exchange of Information for Tax Purposes.
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On June 5, 2019 on the website of the Court of Justice of the European Union (CJEU) the opinion of Advocate General Bobek in the Case C-189/18, Glencore Agriculture Hungary Kft. versus Nemzeti Adó- és Vámhivatal Fellebbviteli Igazgatósága (ECLI:EU:C:2019:462), was published.
Glencore Agriculture Hungary Kft. (Glencore) challenges two decisions of the Nemzeti Adó- és Vámhivatal(National Tax and Customs Administration, Hungary) (‘the NTCA’) which refused deduction of value added tax (VAT) paid on certain supplies on the ground that Glencore was aware or should have been aware of tax evasion or fraud committed by its suppliers. In the main proceedings, Glencore questions the lawfulness of the tax procedures before the NTCA. It complains, in particular, of a lack of fairness and of a breach of its rights of defence.
The national court seised of that challenge, the Fővárosi Közigazgatási és Munkaügyi Bíróság (Budapest Administrative and Labour Court, Hungary), entertains doubts as to the compatibility with EU law of certain national provisions and practices. In particular, the referring court asks for clarifications on the principles governing the burden of proof placed upon tax authorities to prove the involvement of a taxable person in tax evasion perpetrated by its suppliers; the right of the taxable person to be granted access to the documents which are relevant to its defence; and the scope of the review to be carried out by the national court of the findings of the tax authorities and the manner in which those authorities collected evidence.
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